A few items I thought noteworthy for weekend perusal:
Corporations are issuing debt on record terms (and in the junk market in record volume). IBM recently issued three year paper at a meager 1 percent. And JNJ just set the record for longer paper — “around 3.10% for the 10-year maturity and 4.5% for the 30-year paper if market conditions hold.” In a nutshell, while there are many variables at play, front and center is investors’ desire for safety and income. It also partially explains why junk paper is being issued at a record clip. Need I say that this dovetails nicely into the demographic theme I’ve been harping on?
The Journal floats a story — I haven’t seen this one in a while — about the “Hindenberg Omen.” Now, I’m open to all manner of data analysis. But when you tell me (toward the end of your story) that (emphasis mine): “The Omen was behind every market crash since 1987, but also has occurred many other times without an ensuing significant downturn. Market analysts said only about 25% of Omen appearances have led to stock-market declines that can be considered crashes,” you have pretty much wasted my time. Wake me up when you find something with an actual correlation — last I checked, 25% isn’t even in coin-flip territory. And where was this indicator prior to the flash crash, or does that not count?
Third, the Journal’s Kelly Evans did a great one-on-one interview with the inimitable David Rosenberg. This is not sound-bite, dodeca-box TV. It’s good stuff, and absolutely worth 26 minutes of your time.
Last, but not least, Economics of Contempt has some of the truly priceless, must-read research that the sell side was pumping out on Lehman Brothers just before the firm went under. EOC is, in my opinion, one of the blogosphere’s best kept secrets.
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